THE country’s transactions with the rest of the world last year registered a dollar surplus of US$12.8 billion, the highest since 2010. It was also the exact revised projection in December by the Central Bank.
Citing preliminary data from Bangko Sentral ng Pilipinas (BSP), Finance Undersecretary and Chief Economist Gil Beltran said the country’s overall Balance of Payments (BOP) surplus last year was the highest since the country recorded a US$15.24- billion surplus in 2010.
“The country generated a BOP surplus of US$12.8B in 2020, helped by slower imports and outward payments,” Beltran said in an economic bulletin.
The country’s 2020 BOP surplus, which he said was the highest in recent history, was equivalent to 3.5 percent of GDP.
In 2019, the country posted a BOP surplus of US$7.84 billion.
While the BSP has yet to release the December BOP data this week, the Central Bank back in December revised upward its BOP surplus projection to US$12.8 billion for 2020, up from its previous forecast of US$8.1 billion in September.
Peso stable
Apart from the country’s strong BOP position, Beltran also attributed the Philippine peso’s “continued strength and stability” to rising Gross International Reserves (GIR).
Moreover, he said the peso remained as one of the most stable Asian currencies in 2020, despite rising risks in the global economy, including the Covid-19 pandemic.
“During the year, the peso appreciated by 5.18 percent relative to the US dollar, in the middle of the pack of nine Asian currencies including the Taiwan dollar, Chinese yuan, Korean won and Japanese yen which appreciated by 6.33 percent, 6.26 percent, 6.07 percent and 4.94 percent, respectively,” Beltran said.
Likewise, he said the peso-dollar exchange remained stable and was also in the middle of 12 regional currencies. The peso-dollar exchange rate’s coefficient of variation stood at 2.11 percent, better than the 2.24 percent regional average.
A higher coefficient of variation means higher volatility of the exchange rate.
On top of the Covid-19 pandemic, Beltran said other economic risks include the collapse of the global markets, the extreme volatility in currencies, and the downgrading of credit ratings of many economies.
While Beltran said the peso depreciated slightly in the first month of 2021, he argued this is in line with regional currencies which also depreciated at a slightly higher 0.11 percent average.
GIR up 21.6%
To recall, the country’s GIR rose US$109.8 billion in 2020, up by 21.6 percent from US$87.84 billion in 2019.
“As a ratio of imports of goods and services, it rose to 11.7 months from 7.7 months in 2019. These, in turn, boosted the confidence in the Philippine peso,” he said.
The country’s GIR is the level of foreign exchange holdings being managed by the Central Bank during a given period. The GIR is a crucial component of the economy as it is often used to manage the country’s foreign-exchange rate against excess volatility.
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